Page 18 - 2025 Housing Forecast

Lending – AD&C Loan Conditions
Credit conditions for builders and developers continued to tighten
60 40 20 0 -20 -40 -60 -80
Net Easing Indexes
easing
NAHB AD&C
Fed SLOOS
tightening
The average effective rate for Q2 2024:
• from 13.35% to 14.32% on speculative single-family construction loans • from 12.95% to 13.08% on pre-sold single-family construction loans
-100
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Source: NAHB survey; Federal Reserve’s Senior Loan Officer Opinion Survey (SLOOS)
Regulatory Costs $93,870 Per New Home (11% Gain 2016 to 2021) Total effect of building codes, land use, environmental and other rules
Hard costs of compliance (fees, required studies, etc.), $11,791
Land dedicated to the govt. or otherwise left unbuilt, $10,854
Standards (setbacks, etc.) that go beyond the ordinary, $8,992
Fees paid by the builder after purchasing the lot, $12,184
Changes to building codes over the past 10 years, $24,144
Architectural design standards beyond the ordinary, $10,794
OSHA/other labor requirements during construction, $4,477
23.8% of price
Cost of applying for zoning approval $6,473
Source: NAHB/Wells Fargo Housing Market Index (HMI)
During Development: $41,330
During Construction: $52,540
OSHA/other labor requirements during development, $1,779
Pure cost of delay during development, $1,442
Pure cost of delay during construction, $941
1
5
Eliminate excessive regulations
NAHB 10-Point Plan to Boost Housing Supply
Increased housing supply reduces shelter inflation and eases the affordability crisis
2 Promote careers in the skilled trades
Fix building material supply chains and ease
3 costs
Pass federal tax legislation to expand the
4 production of affordable and attainable housing Overturn inefficient local zoning rules
Construction Outlook
Multifamily Construction Slowdown Apartment construction will record a significant decline in 2024
600 500 400 300 200 100
Thousands of units, SAAR
Avg=344,000
76% fall
2Q22 to 3Q25 41% fall
0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Source: U.S. Census Bureau (BOC) and NAHB forecast
Year
2026f
2021
2022
2023
2024f
2025f
Units
474,000
546,000
473,000
343,000
323,000
357,000
% Change
21%
15%
-13%
-27%
-6%
10%
Alleviate permitting roadblocks 6
Adopt reasonable and cost-effective building codes
Reduce local impact fees and other upfront taxes associated with housing construction
Make it easier for developers to finance new housing
7 8
9
Update employment policies to promote flexibility
and opportunity 10
450 400 350 300 250 200 150 100
50
Residential Remodeling Positive growth prospects
Billions, USD, SAAR
0
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Source: U.S. Bureau of Economic Analysis (BEA): National Income and Product Accounts (NIPA) and NAHB forecast. Note: In the analysis, 1-year moving average is used for adjusted data to smooth the trend.
Year
2023 2024f 2025f 2026f
Percent Change
4% 7% 4% 2%
Adjusted
Actual
National
Economic Update
18 2025 HOUSING FORECAST